TORONTO, Nov 20 (Reuters) - Canada’s Hudson’s Bay Co is set to raise C$365 million ($367 million) in its initial public stock offering, well below the department store operator’s original target of about C$400 million.

HBC has priced the offering of 21.48 million shares at C$17 apiece - at the bottom of the company’s already lowered range of C$17 to C$18. The offering price pegs its market capitalization at about C$2 billion.

The shares began trading on the Toronto Stock Exchange on Tuesday on a “when-issued” basis, sliding 1.5 percent from the offer price to C$16.75. The stock is trading under the symbol “HBC,” the same as it did before going private in 2006.

Trading volume in the stock was significant, with more than 3 million shares changing hands by 1400 ET, making HBC one of the 10 most actively traded stocks on the TSX.

“This gives you an indication of where people would buy and sell the stock today ... But it is only the more speculative people trading in the market right now, not a full complement of players,” said one trader, who does not own any position in the stock but asked to remain unnamed.

All trades in the stock executed ahead of the official close of the offering have to be matched and settled, as and when the offering officially closes. If the offering fails to close for any reason, all these trades will be considered as null and void.

HBC said in a statement late on Monday that the TSX has conditionally approved its listing. The stock is slated to start trading officially on the anticipated closing date of Nov. 26.

The company, which owns two venerable chains, Lord & Taylor in the United States and Hudson’s Bay in Canada, originally aimed for an offering price of C$18.50 to C$21.50 a share.

The department store operator faces stiff competition. In the United States, Lord & Taylor competes with a resurgent Macy’s Inc ; in Canada, HBC faces competition from Target Corp and other U.S. companies that are keen to expand their retail footprint.

Founded in 1670, Hudson’s Bay was a fur trading business long before it operated department stores, running trading posts across what is now Canada. It went private in 2006 as shoppers flocked to specialty retailers and U.S.-based heavyweights such as Wal-Mart Stores Inc.

NRDC Equity Partners, controlled by U.S. real estate investor Richard Baker and his family, bought out HBC’s other investors in 2008, and integrated it with Lord & Taylor, which operates 48 stores across the United States.

HBC said the IPO will result in gross proceeds to the company of about C$250 million, and proceeds to selling shareholders of about C$115 million. Net proceeds to the company will be used to repay debt, HBC said.